A U.S. appeals court has resurrected a US$1 billion copyright case filed by Viacom against YouTube by sending the case back to trial by a jury.

The U.S. Court of Appeals for the Second Circuit, in a decision released Thursday, sent the lawsuit back to the U.S. District Court for the Southern District of New York. The appeals court vacated district Judge Louis Stanton's June 2010 summary judgment against Viacom.

While Stanton correctly ruled that YouTube is protected from some copyright infringement claims under the Digital Millennium Copyright Act, "a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website," Judge Jose Cabranes wrote in the appeals court decision. The district court also erred in deciding that the DMCA's so-called safe harbor protects website owners unless they have knowledge of specific works being infringed on their sites, the appeals court said.

The decision upholds a long-standing interpretation of the DMCA, YouTube said in a statement. "All that is left of the Viacom lawsuit that began as a wholesale attack on YouTube is a dispute over a tiny percentage of videos long ago removed from YouTube," the statement said. "Nothing in this decision impacts the way YouTube is operating."

Viacom, which operates television networks including Comedy Central, MTV and Nickelodeon, filed the lawsuit against YouTube in March 2007. Viacom accused YouTube of "brazen" copyright infringement by allowing users to upload more than 150,000 clips of Viacom's programming, including the Daily Show.

YouTube and parent company Google were "willfully blind" to widespread copyright infringement on the site, Viacom and other plaintiffs argued.

Public Knowledge, a digital rights group, said it was pleased with the appeals court decision. The court upheld the basic principles of the DMCA and rejected Viacom's attempt to force websites to actively monitor for infringement, the group said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.